We derive an inter-temporal theory of changing tastes from the normative primitives defined in Sagi (1998). Using a notion of time consistency we establish several interesting results: (i) the set bounding agents' potential tastes shrinks (weakly) with time, (ii) non-linear induced preferences...

We present two ways in which trading in a replicatable option can affect the price process of the underlying asset. In the first situation, trading an option that each investor views as payoff-redundant breaks a non-fully-revealing equilibrium that exists when the option market is absent. The...

We model a capital market in which some proportion of investors get utility from owning firms that undertake spending on corporate social responsibility (CSR). We also assume different categories of firms: those with good CSR fundamentals and those with poor CSR fundamentals. We develop an...